Dollar regains some ground as OPEC, other events loom

HiroyukiKachi

The dollar was slightly higher against the yen and the euro in Asian trade on Tuesday, with many investors sitting on the fence ahead of major events later this week ranging from the OPEC meeting on Wednesday to Italy’s national referendum on Sunday.

The greenback
USDJPY, +1.16%
climbed as high as ¥112.25 and was last at ¥112.04, compared with ¥111.92 late Monday in New York.

The ICE dollar index
DXY, +0.47%
, a measure of the currency against six major rivals, rose was down 0.08% at 101.25.The WSJ Dollar Index
BUXX, +0.48%
, a measure of the U.S. dollar against a wider basket of major currencies, was up 0.07% at 91.50. The euro
EURUSD, -0.5086%
was at $1.0607 from $1.0612 late Monday.

“It seems investors are taking a wait-and-see stance right now,” said Shusuke Yamada, chief FX strategist at Merrill Lynch Japan Securities. Investors are keeping their eyes on a possible showdown of OPEC members at their meeting Wednesday in Vienna, the U.S. jobs data on Friday and the national referendum in Italy on Sunday, he said.

“It is true that [the dollar’s] upside momentum is receding for now. But the dollar may head toward ¥115-¥120 over the mid-term,” eventually by next year or so, said Yamada.

The dollar had soared in a post-U.S. election rally, touching its eight-month high of ¥113.90 last week, as investors grew more confident about U.S. economic growth and the prospect for higher interest rates under president-elect Donald Trump’s proposals to boost fiscal stimulus. But the dollar has been struggling to go upside further this week.

It’s too early to determine a turnaround in the uptrend of the dollar against the yen, said Takuya Kanda, senior researcher at Gaitame.Com Research Institute in a note. The dollar fell below its five-day moving average yesterday for the first time since the U.S. election day on Nov. 8.

But as the saying among the market players goes, investors can buy on the first dip in the process of a bull market, said Kanda, adding whether the dollar can regain the five-day moving average, now around ¥112.50, will be in focus later today.

In other currency trade, the euro
EURJPY, +0.62%
was at ¥118.81 from ¥118.79 overnight.

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